I understand that a share of stock represents a share of ownership in a company. But if dividends are not paid, what is the actual value of that stock? Why does it have value? The company making more money does not flow to me because I own the stock. So is it basically just like owning a baseball card in that if the player (company) does well more people want to collect (own) their cards (stock) and this the price goes up?
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>But if dividends are not paid, what is the actual value of that stock?
Where else are you going to put your money?
This is the thing people have to appreciate about investments: There are, in point of fact, a limited number of places you can put your cash which will give you a dividend or annuity.
The reason AMZN doesn’t pay dividends is not because it isn’t profitable, but because their board of directors and corporate leadership have agreed that reinvesting their profits into future growth is a better use of that money, in their role as fiduciaries on behalf of the stockholders.
Also, they *have* indirectly paid money to their shareholders, in the form of buybacks. Why buybacks? Because dividends are taxed immediately, and stock buybacks are taxed when the shareholder chooses to sell.
How do you know what a company is worth? If you can answer that question consistently and accurately, you can make a **SHITLOAD** of money on the stock market.
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